Musings on the Bloated Supply Chain

Too many players, with not much-differentiated value, have led to an extremely bloated supply chain. What efforts can publishers make to not have it impact their revenue?

Can we just call a spade a spade? All of the bloat in the supply chain has been caused by a lack of understanding that the internet and any website is an ecosystem. 

And like all ecosystems, as they become more complex their impacts are noticeable across the entire ecosystem rather than in one area. We have been building the web ecosystem in silos not realizing that when we make changes in one place it has an impact on the others. 

I was part of the early group of people who helped grow the advertising ecosystem. All you had to do was place a “snippet of code” in the header of your site and you’d be generating revenue. That worked and many digital businesses were born that are household names today. 

Today, there are thousands and thousands of ad-supported websites across the globe. However, as the technology advanced, mid to long-tail publishers found it harder to keep up. There is now an entire industry of companies that are focused on helping these publishers monetize their content. 

These publishers have relationships with every single SSP, which brings them scale with the ability to serve numerous ads to their visitors in a given month increasing their ability to bring in a higher revenue share than they would be able to obtain on their own. These ad tech companies they work with, offer first-to-market access to new tools and capabilities to make this all possible.

For publishers, it’s also beneficial to work with an authorized reseller to focus on growing their site traffic and their business. However, many of these companies manage the publishers who partner with them like an ad network, diminishing the ability of individual publishers to maximize their revenue potential. This also bloats the bidstream damaging the entire ecosystem. 

As Chris Kane, Founder of Jounce Media explains, “…the sell side of the market remains highly fragmented. Open Internet media companies are financially rewarded for building non-exclusive partnerships with sell-side technology companies. The resulting bidstream bloat degrades unit economics of programmatic advertising, distorting the allocation of DSP spend, and slowing the emergence of long-term winners in the SSP market.”

I am not even getting into the lack of transparency in the ecosystem or the high level of variability in the supply fees that publishers are charged. In a recent AdMonsters article about the MediaMath fallout and some SSPs leaning on sequential liability clauses, I said, “Publishers need to be aware of what’s happening in the market, within the digital ecosystem, to ensure its health and safety. We cannot turn a blind eye to understanding how revenue is generated, who the players are, what differentiates them, and which companies continue to support the ecosystem for the better.”

In theory, the way the ecosystem is set up everything should all work quite well but instead, by increasing the number of ads on a page or the number of partners, or the number of integrations to benefit the ad network rather than the publisher and user experience everything has gone sideways. 

Many studies have shown that consumers are willing to share their data in exchange for content that is meaningful and relevant, and that includes advertising. That’s why publishers need to get back to focusing on the user experience and maximizing the value exchange to bring about a future where ads and content can exist harmoniously for the benefit of publishers, audiences, and advertisers alike.